BANKRUPTCY COURT Settlement clears major obstacle to Weirton Steel sale

A $70 million obligation for workers' compensation remains unresolved.
MORGANTOWN, W.Va. (AP) -- A group of creditors who stood to collect only $20 million from the sale of bankrupt Weirton Steel Corp. will get about $30 million under a settlement approved Thursday by a federal bankruptcy judge.
"I think it's fantastic that you all were able to come together and get a deal," said U.S. Bankruptcy Court Judge L. Edward Friend II.
Friend approved the deal between Weirton and the Informal Committee of Secured Noteholders following a brief hearing in Wheeling. His decision clears one of the last major obstacles to the $237.5 million sale of the company to Ohio's International Steel Group.
Under the settlement, ISG agreed not to close on the sale until May 17. Company officials said the closing will likely occur that day.
"This is the last significant step," said Weirton Chief Executive Officer D. Leonard Wise. "Given the circumstances, it's probably the best possible resolution."
Wise said he wished more jobs could have been saved and that health care coverage could have continued for thousands of retirees, "but hopefully at least now there's definition for the people who are left."
ISG plans to employ about 2,100 of Weirton's 3,000 workers.
Details
Under the settlement, the noteholders will get the $20.4 million they already expected from the sale, plus up to $9.6 million for various expenses they have incurred, including fees for financial advisers, lawyers and banks. They could receive another $6 million when the judge distributes the proceeds to various creditors.
The noteholders declined to comment after the hearing.
They had tried repeatedly to stop ISG's purchase, contending it undervalues Weirton's assets and offers little repayment on what they say is a $145 million debt.
The creditors tried to outbid ISG but lost that battle in Bankruptcy Court. They then filed a motion in U.S. District Court to stop or delay the sale. As part of the agreement, they will drop any further opposition.
The transaction would make ISG the largest integrated steelmaker in the nation, surpassing Pittsburgh-based U.S. Steel.
Still unresolved as of Thursday was self-insured Weirton's $70 million obligation to the state Workers' Compensation Commission. Without state funding, other large employers that pay costs for their own injured workers must cover that deficit, which could raise their premiums as much as 50 percent.
The commission said Thursday it will continue to challenge the bankruptcy court's forgiveness of Weirton's obligation and "will exhaust every avenue available to us to recover that debt."
"It is our position that Weirton Steel's board of directors would be within its authority to waive that provision of the sale agreement," the commission said in a statement.